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Housing Market

The UK’s Build to Rent Sector: A Goldmine for Investors Poised to Double by 2028

Key Takeaways

• UK’s Build to Rent sector growth

• Predictions for 2028 market value

• Investor interest and housing demand dynamics

• Impact on housing availability and affordability

A Flourishing Investment Landscape

The UK’s Build to Rent (BTR) sector is undergoing a transformative growth spurt, with predictions suggesting that its value could nearly double by 2028. The latest market update from property consultancy firm Knight Frank illuminates the burgeoning investment landscape, emphasizing the sector’s rapid expansion amidst soaring rental demand. Currently, the UK boasts 90,000 completed BTR homes in schemes with at least 75 units, a number that is only expected to rise in the coming years. Knight Frank’s insightful analysis forecasts a staggering 77% increase in the total value of the BTR sector, reaching an impressive £126bn by 2028.

This anticipated growth signals a robust investment landscape, marked by a growing appetite for more choice and flexibility in rental housing. The sector’s expansion is not merely a reflection of investor interest but also aligns with the acute need for high-quality accommodation across the UK. Birmingham, for instance, is experiencing a notable shortage of homes, which is set to keep prices and demand buoyant. The city’s predicament underscores the unique opportunity residential developers have to fill the gap in the market with much-needed housing solutions.

The Driving Forces Behind the Boom

The unprecedented growth of the BTR sector is propelled by a confluence of factors, including investor appetite and housing demand dynamics. Knight Frank’s analysis reveals that rental growth for purpose-built student housing and the BTR sector is on the rise, with thousands of new homes expected to complete in the coming years. This growth trajectory is further supported by recent Energy Performance Certificate data, which, despite indicating a decline in development in early stages, points to a resilient and expanding BTR sector.

Moreover, London’s private rental sector is witnessing a long overdue transformation, exemplified by companies like Southwark-headquartered Get Living. These firms have played a pivotal role in reshaping the housing landscape, turning areas like the former Athletes’ Village at the Olympic Park into vibrant, large-scale neighborhoods. This evolution reflects the sector’s adaptability and its capacity to meet the changing needs and preferences of renters in the UK.

Implications for the Housing Market

The ascension of the BTR sector holds significant implications for housing availability and affordability in the UK. As the sector expands, it is poised to reshape the housing market, offering more choices and flexibility for renters. This is particularly crucial in a time when the demand for rental properties outstrips supply, leading to increased rental prices and competition for available units. The growth of the BTR sector could alleviate some of these pressures by introducing a substantial number of high-quality rental properties to the market.

However, the sector’s expansion also presents challenges, especially in cities like London where development faces numerous hurdles. Despite these obstacles, the potential for the BTR sector to contribute positively to the UK’s housing market is undeniable. By providing a reliable supply of rental properties, the sector can play a crucial role in stabilizing rental prices and improving living standards for a significant portion of the population.

In conclusion, the UK’s Build to Rent sector is on a trajectory of remarkable growth, with its value expected to nearly double by 2028. This booming investment landscape is driven by a combination of investor interest, a pressing need for high-quality accommodation, and the dynamics of housing demand. As the sector continues to expand, its impact on housing availability and affordability will be significant, offering a glimmer of hope in addressing the UK’s housing challenges. For investors and developers alike, the BTR sector represents a golden opportunity to tap into a market that is not only lucrative but also essential in meeting the country’s housing needs.

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